diff --git a/packages/scene-composer/src/augmentations/components/three-fiber/anchor/AnchorWidget.tsx b/packages/scene-composer/src/augmentations/components/three-fiber/anchor/AnchorWidget.tsx
index 145017dd0..9ba4b9ccc 100644
--- a/packages/scene-composer/src/augmentations/components/three-fiber/anchor/AnchorWidget.tsx
+++ b/packages/scene-composer/src/augmentations/components/three-fiber/anchor/AnchorWidget.tsx
@@ -41,6 +41,7 @@ export interface AnchorWidgetProps {
   valueDataBinding?: IValueDataBinding;
   rule?: IRuleBasedMap;
   navLink?: INavLink;
+  customColors?: string[];
 }
 type overrideCustomColorType = (rulevalue: string | undefined) => void;
 
diff --git a/packages/scene-composer/src/augmentations/components/three-fiber/anchor/__tests__/AnchorWidget.spec.tsx b/packages/scene-composer/src/augmentations/components/three-fiber/anchor/__tests__/AnchorWidget.spec.tsx
index c3d5c56bd..396c7881d 100644
--- a/packages/scene-composer/src/augmentations/components/three-fiber/anchor/__tests__/AnchorWidget.spec.tsx
+++ b/packages/scene-composer/src/augmentations/components/three-fiber/anchor/__tests__/AnchorWidget.spec.tsx
@@ -2,6 +2,7 @@ import renderer, { act } from 'react-test-renderer';
 import React from 'react';
 import * as THREE from 'three';
 import { useLoader } from '@react-three/fiber';
+import wrapper from '@awsui/components-react/test-utils/dom';
 
 import { AnchorWidget } from '../AnchorWidget';
 import { DefaultAnchorStatus, DEFAULT_TAG_GLOBAL_SETTINGS, KnownComponentType } from '../../../../..';
diff --git a/packages/scene-composer/src/components/panels/scene-components/AnchorComponentEditor.tsx b/packages/scene-composer/src/components/panels/scene-components/AnchorComponentEditor.tsx
index c6dbb76a2..2bc01ffea 100644
--- a/packages/scene-composer/src/components/panels/scene-components/AnchorComponentEditor.tsx
+++ b/packages/scene-composer/src/components/panels/scene-components/AnchorComponentEditor.tsx
@@ -164,7 +164,8 @@ export const AnchorComponentEditor: React.FC<IAnchorComponentEditorProps> = ({
 
   const hasIcon = iconSelectedOptionIndex >= 0;
   const iconGridDefinition = hasIcon ? [{ colspan: 10 }, { colspan: 2 }] : [{ colspan: 12 }];
-  const isAllValid = tagStyle && iconOptions[iconSelectedOptionIndex]?.value === 'Custom';
+  const isCustomStyle = tagStyle && iconOptions[iconSelectedOptionIndex]?.value === 'Custom';
+
   return (
     <SpaceBetween size='s'>
       <FormField label={intl.formatMessage({ defaultMessage: 'Default Icon', description: 'Form field label' })}>
@@ -189,7 +190,7 @@ export const AnchorComponentEditor: React.FC<IAnchorComponentEditorProps> = ({
             placeholder={intl.formatMessage({ defaultMessage: 'Choose an icon', description: 'placeholder' })}
           />
           {hasIcon &&
-            (isAllValid ? (
+            (isCustomStyle ? (
               <DecodeSvgString
                 selectedColor={anchorComponent.chosenColor ?? colors.customBlue}
                 iconString={iconString!}
@@ -201,12 +202,19 @@ export const AnchorComponentEditor: React.FC<IAnchorComponentEditorProps> = ({
             ))}
         </Grid>
       </FormField>
-      {isAllValid ? (
-        <FormField stretch>
+      {isCustomStyle ? (
+        <FormField>
           <ColorPicker
             color={anchorComponent.chosenColor ?? colors.customBlue}
-            onSelectColor={(pickedColor) => onUpdateCallback({ chosenColor: pickedColor })}
-            label={intl.formatMessage({ defaultMessage: 'Colors', description: 'Colors' })}
+            onSelectColor={(pickedColor) => {
+              onUpdateCallback({
+                chosenColor: pickedColor,
+              });
+            }}
+            onUpdateCustomColors={(chosenCustomColors) => onUpdateCallback({ customColors: chosenCustomColors })}
+            customColors={anchorComponent.customColors}
+            colorPickerLabel={intl.formatMessage({ defaultMessage: 'Colors', description: 'Colors' })}
+            customColorLabel={intl.formatMessage({ defaultMessage: 'Custom colors', description: 'Custom colors' })}
           />
         </FormField>
       ) : null}
diff --git a/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPicker.tsx b/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPicker.tsx
index 54ef33350..eb4008dd6 100644
--- a/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPicker.tsx
+++ b/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPicker.tsx
@@ -1,7 +1,7 @@
 import { Button, FormField, Icon, Input, InputProps, SpaceBetween, TextContent } from '@awsui/components-react';
 import { NonCancelableCustomEvent } from '@awsui/components-react/internal/events';
-import React, { useCallback, useState } from 'react';
-import { ChromePicker, CirclePicker } from 'react-color';
+import React, { useCallback, useEffect, useState } from 'react';
+import { CirclePicker, ColorResult, SketchPicker } from 'react-color';
 import { useIntl } from 'react-intl';
 
 import { IColorPickerProps } from '../interface';
@@ -17,12 +17,19 @@ import {
 import { colorPickerPreviewSvg } from './ColorPickerUtils/SvgParserHelper';
 import { palleteColors } from './ColorPickerUtils/TagColors';
 
-export const ColorPicker = ({ color, onSelectColor, label }: IColorPickerProps): JSX.Element => {
+export const ColorPicker = ({
+  color,
+  onSelectColor,
+  customColors,
+  onUpdateCustomColors,
+  colorPickerLabel,
+  customColorLabel,
+}: IColorPickerProps): JSX.Element => {
   const [showPicker, setShowPicker] = useState<boolean>(false);
   const [newColor, setNewColor] = useState<string>(color);
   const [showChromePicker, setShowChromePicker] = useState<boolean>(false);
   const [hexCodeError, setHexCodeError] = useState<string>(''); // State variable for hex code error
-
+  const [customInternalColors, setCustomInternalColors] = useState<string[]>(customColors ?? []);
   const intl = useIntl();
 
   /**
@@ -34,30 +41,40 @@ export const ColorPicker = ({ color, onSelectColor, label }: IColorPickerProps):
    * @returns
    */
   const isValidHexCode = (hexCode: string) => {
-    const hexRegex = /^#([A-Fa-f0-9]{6}|[A-Fa-f0-9]{3})$/;
+    const hexRegex = /^#([A-Fa-f0-9]{6})$/;
     return hexRegex.test(hexCode);
   };
 
-  const handleClick = () => {
-    setShowPicker(!showPicker);
-  };
-
-  const handleColorChange = (color) => {
-    setNewColor(color.hex);
-    onSelectColor(color.hex);
-  };
+  const handleOutsideClick = useCallback((event: MouseEvent) => {
+    const target = event.target as HTMLElement;
+    const pickerContainer = document.getElementById('circle-picker');
+    if (pickerContainer && !pickerContainer.contains(target)) {
+      setShowPicker(false);
+    }
+  }, []);
 
-  const handleHexCodeChange = useCallback((event: NonCancelableCustomEvent<InputProps.ChangeDetail>) => {
-    setNewColor(event.detail.value);
-    if (isValidHexCode(event.detail.value)) {
-      setHexCodeError(''); // Clear any existing error message
-      onSelectColor(event.detail.value);
+  useEffect(() => {
+    if (showPicker) {
+      document.addEventListener('click', handleOutsideClick);
     } else {
-      setHexCodeError(
-        intl.formatMessage({ defaultMessage: 'Invalid hex code', description: 'hex validations messages' }),
-      ); // Set the error message
+      document.removeEventListener('click', handleOutsideClick);
     }
-  }, []);
+
+    return () => {
+      document.removeEventListener('click', handleOutsideClick);
+    };
+  }, [showPicker, handleOutsideClick]);
+
+  const checkIfCustomColor = (color: any) => {
+    if (!Object.values(palleteColors).includes(color)) {
+      setCustomInternalColors(customInternalColors.concat(color));
+      onUpdateCustomColors?.([...new Set(customInternalColors)]);
+    }
+  };
+
+  const handleClick = () => {
+    setShowPicker(!showPicker);
+  };
 
   const handleShowChromePicker = () => {
     setShowChromePicker(true);
@@ -69,22 +86,62 @@ export const ColorPicker = ({ color, onSelectColor, label }: IColorPickerProps):
     setShowChromePicker(false);
   };
 
-  const handleCloseChromePicker = () => {
+  const handleCloseCustomPicker = () => {
     setShowChromePicker(false);
   };
 
+  const handleColorChange = useCallback(
+    (color: ColorResult) => {
+      checkIfCustomColor(color.hex);
+      setHexCodeError(''); // Clear any existing error message
+      setNewColor(color.hex);
+      onSelectColor(color.hex);
+    },
+    [color, onSelectColor, onUpdateCustomColors],
+  );
+
+  const handleHexCodeChange = useCallback(
+    (event: NonCancelableCustomEvent<InputProps.ChangeDetail>) => {
+      setNewColor(event.detail.value);
+      if (isValidHexCode(event.detail.value)) {
+        setHexCodeError(''); // Clear any existing error message
+        onSelectColor(event.detail.value);
+        checkIfCustomColor(event.detail.value);
+      } else {
+        setHexCodeError(
+          intl.formatMessage({ defaultMessage: 'Invalid hex code', description: 'hex validations messages' }),
+        ); // Set the error message
+      }
+    },
+    [color, onSelectColor],
+  );
+
+  const handleCustomPickerSelection = (color) => {
+    checkIfCustomColor(color.hex);
+    setNewColor(color.hex);
+    onSelectColor(color.hex);
+  };
+
+  useEffect(() => {
+    setNewColor(color);
+  }, [color]);
+
+  useEffect(() => {
+    checkIfCustomColor(color);
+  }, [color]);
+
   return (
-    <SpaceBetween size='m'>
+    <SpaceBetween size='l'>
       <FormField errorText={hexCodeError}>
         <SpaceBetween size='m' direction='horizontal'>
           <TextContent>
-            <h5>{label}</h5>
+            <h5>{colorPickerLabel}</h5>
           </TextContent>
           <Button
             data-testid='color-preview'
             ariaLabel={intl.formatMessage({ defaultMessage: 'colorPreview', description: 'color picker preview' })}
             variant='inline-icon'
-            iconSvg={<Icon size='big' svg={colorPickerPreviewSvg(color)} />}
+            iconSvg={<Icon size='big' svg={colorPickerPreviewSvg(newColor)} />}
             onClick={() => {
               handleClick();
               setHexCodeError('');
@@ -96,7 +153,7 @@ export const ColorPicker = ({ color, onSelectColor, label }: IColorPickerProps):
             value={newColor}
             onChange={handleHexCodeChange}
           />
-          <div style={tmColorPickerContainer}>
+          <div id='circle-picker' style={tmColorPickerContainer}>
             {showPicker && !showChromePicker && (
               <div style={tmColorPickerPopover}>
                 <div>
@@ -110,10 +167,21 @@ export const ColorPicker = ({ color, onSelectColor, label }: IColorPickerProps):
                     onChange={handleColorChange}
                   />
                 </div>
-                <div style={tmDivider} />
-                <button style={tmAddButton} onClick={handleShowChromePicker}>
-                  <Icon name='add-plus' />
-                </button>
+                <SpaceBetween size='s'>
+                  <div style={tmDivider} />
+                  <TextContent>
+                    <h5>{customColorLabel}</h5>
+                  </TextContent>
+                  <CirclePicker
+                    width='300px'
+                    colors={[...new Set(customInternalColors)]}
+                    color={newColor}
+                    onChange={handleColorChange}
+                  />
+                  <button style={tmAddButton} onClick={handleShowChromePicker}>
+                    <Icon name='add-plus' />
+                  </button>
+                </SpaceBetween>
               </div>
             )}
           </div>
@@ -124,9 +192,9 @@ export const ColorPicker = ({ color, onSelectColor, label }: IColorPickerProps):
           <div
             aria-label={intl.formatMessage({ defaultMessage: 'chromePicker', description: 'chrome picker' })}
             style={tmCover}
-            onClick={handleCloseChromePicker}
+            onClick={handleCloseCustomPicker}
           />
-          <ChromePicker color={color} onChangeComplete={(newColor) => onSelectColor(newColor.hex)} />
+          <SketchPicker disableAlpha={true} color={newColor} onChangeComplete={handleCustomPickerSelection} />
         </div>
       )}
     </SpaceBetween>
diff --git a/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPickerUtils/SvgParserHelper.tsx b/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPickerUtils/SvgParserHelper.tsx
index 892ff766d..c8e30357f 100644
--- a/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPickerUtils/SvgParserHelper.tsx
+++ b/packages/scene-composer/src/components/panels/scene-components/tag-style/ColorPicker/ColorPickerUtils/SvgParserHelper.tsx
@@ -9,7 +9,7 @@ export const replaceFillAttribute = (element: Element, selectedColor: string): v
     element.setAttribute('stroke', selectedColor);
   }
   if (tagName === 'circle') {
-    element.setAttribute('fill', selectedColor!);
+    element.setAttribute('fill', selectedColor);
   }
 };
 
diff --git a/packages/scene-composer/src/components/panels/scene-components/tag-style/interface.tsx b/packages/scene-composer/src/components/panels/scene-components/tag-style/interface.tsx
index 2814a7fee..557cf5992 100644
--- a/packages/scene-composer/src/components/panels/scene-components/tag-style/interface.tsx
+++ b/packages/scene-composer/src/components/panels/scene-components/tag-style/interface.tsx
@@ -7,5 +7,8 @@ export interface IColorPickerProps {
   color: string;
   onSelectColor: (color: string) => void;
   iconSvg?: string;
-  label?: string;
+  colorPickerLabel?: string;
+  customColorLabel?: string;
+  customColors?: string[];
+  onUpdateCustomColors?: (customColors: string[]) => void;
 }
diff --git a/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetEditor.tsx b/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetEditor.tsx
index 2119c806f..40f29ae1e 100644
--- a/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetEditor.tsx
+++ b/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetEditor.tsx
@@ -1,4 +1,4 @@
-import React, { useState } from 'react';
+import React, { useEffect, useState } from 'react';
 import { useIntl, defineMessages } from 'react-intl';
 import { Grid, Select } from '@awsui/components-react';
 
@@ -60,7 +60,12 @@ export const SceneRuleTargetEditor: React.FC<ISceneRuleTargetEditorProps> = ({
       label: formatMessage(i18nSceneResourceTypeStrings[SceneResourceType[type]]) || SceneResourceType[type],
       value: SceneResourceType[type],
     }));
-  const isAllValid = tagStyle && targetInfo.value === 'Custom';
+  const isCustomStyle = tagStyle && targetInfo.value === 'Custom';
+
+  useEffect(() => {
+    setChosenColor(getCustomColor);
+  }, [getCustomColor]);
+
   return (
     <Grid gridDefinition={[{ colspan: 4 }, { colspan: 8 }]}>
       <Select
@@ -92,7 +97,7 @@ export const SceneRuleTargetEditor: React.FC<ISceneRuleTargetEditorProps> = ({
             }}
             chosenColor={chosenColor}
           />
-          {isAllValid && (
+          {isCustomStyle && (
             <ColorPicker
               color={chosenColor}
               onSelectColor={(newColor) => {
@@ -101,7 +106,8 @@ export const SceneRuleTargetEditor: React.FC<ISceneRuleTargetEditorProps> = ({
                 onChange(convertToIotTwinMakerNamespace(targetInfo.type, colorWithIcon));
                 setChosenColor(newColor);
               }}
-              label={formatMessage({ defaultMessage: 'Colors', description: 'Colors' })}
+              colorPickerLabel={formatMessage({ defaultMessage: 'Colors', description: 'Colors' })}
+              customColorLabel={formatMessage({ defaultMessage: 'Custom colors', description: 'Custom colors' })}
             />
           )}
         </>
diff --git a/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetIconEditor.tsx b/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetIconEditor.tsx
index 0552f3d05..b4e24340c 100644
--- a/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetIconEditor.tsx
+++ b/packages/scene-composer/src/components/panels/scene-rule-components/SceneRuleTargetIconEditor.tsx
@@ -37,7 +37,7 @@ export const SceneRuleTargetIconEditor: React.FC<ISceneRuleTargetIconEditorProps
     return btoa(SCENE_ICONS[selectedIcon]);
   }, [selectedIcon]);
 
-  const isAllValid = tagStyle && targetValue === 'Custom';
+  const isCustomStyle = tagStyle && targetValue === 'Custom';
   return (
     <Grid gridDefinition={[{ colspan: 9 }, { colspan: 2 }]}>
       <Select
@@ -60,7 +60,7 @@ export const SceneRuleTargetIconEditor: React.FC<ISceneRuleTargetIconEditorProps
             'Specifies the localized string that describes an option as being selected. This is required to provide a good screen reader experience',
         })}
       />
-      {isAllValid ? (
+      {isCustomStyle ? (
         <DecodeSvgString
           selectedColor={chosenColor ?? colors.customBlue}
           iconString={iconString}
diff --git a/packages/scene-composer/src/components/panels/scene-rule-components/__tests__/SceneRuleTargetEditor.spec.tsx b/packages/scene-composer/src/components/panels/scene-rule-components/__tests__/SceneRuleTargetEditor.spec.tsx
index 48bcf9a38..6a7b43d9a 100644
--- a/packages/scene-composer/src/components/panels/scene-rule-components/__tests__/SceneRuleTargetEditor.spec.tsx
+++ b/packages/scene-composer/src/components/panels/scene-rule-components/__tests__/SceneRuleTargetEditor.spec.tsx
@@ -1,6 +1,6 @@
-import { fireEvent, render, screen } from '@testing-library/react';
-import React from 'react';
 import wrapper from '@awsui/components-react/test-utils/dom';
+import { render, screen } from '@testing-library/react';
+import React from 'react';
 
 import { DefaultAnchorStatus, IotTwinMakerNumberNamespace, SceneResourceType } from '../../../../';
 import { getGlobalSettings } from '../../../../common/GlobalSettings';
@@ -37,7 +37,7 @@ describe('SceneRuleTargetEditor', () => {
     });
     render(<SceneRuleTargetEditor target='Custom-123' onChange={onChange} />);
 
-    const sceneRuleTargetIconEditor = screen.getByLabelText('Custom style');
+    const sceneRuleTargetIconEditor = screen.getByRole('button', { name: /Custom style/i });
     expect(sceneRuleTargetIconEditor).toBeTruthy();
     const colorPicker = screen.getByTestId('color-preview');
     colorPicker.click();
diff --git a/packages/scene-composer/src/components/three-fiber/AnchorComponent/index.tsx b/packages/scene-composer/src/components/three-fiber/AnchorComponent/index.tsx
index f0d0d655c..bc04f4a97 100644
--- a/packages/scene-composer/src/components/three-fiber/AnchorComponent/index.tsx
+++ b/packages/scene-composer/src/components/three-fiber/AnchorComponent/index.tsx
@@ -14,7 +14,6 @@ interface IAnchorComponentProps {
 const AnchorComponent: React.FC<IAnchorComponentProps> = ({ node, component }: IAnchorComponentProps) => {
   const sceneComposerId = useSceneComposerId();
   const rule = useStore(sceneComposerId)((state) => state.getSceneRuleMapById(component.ruleBasedMapId));
-
   return (
     <group name={getComponentGroupName(node.ref, 'TAG')}>
       <AnchorWidget
diff --git a/packages/scene-composer/src/interfaces/components.ts b/packages/scene-composer/src/interfaces/components.ts
index a019d8e71..51dbfbb36 100644
--- a/packages/scene-composer/src/interfaces/components.ts
+++ b/packages/scene-composer/src/interfaces/components.ts
@@ -47,6 +47,7 @@ export interface IAnchorComponent extends ISceneComponent {
   navLink?: INavLink;
   offset?: Vector3;
   chosenColor?: string;
+  customColors?: string[];
 }
 
 /**
@@ -70,9 +71,9 @@ export const SelectedAnchor = 'Selected';
  */
 export interface ITagData {
   chosenColor?: string;
-
   navLink?: INavLink;
   dataBindingContext?: unknown;
+  customColors?: string[];
 }
 
 /**
diff --git a/packages/scene-composer/src/models/SceneModels.ts b/packages/scene-composer/src/models/SceneModels.ts
index 334e1ad11..9edc11b35 100644
--- a/packages/scene-composer/src/models/SceneModels.ts
+++ b/packages/scene-composer/src/models/SceneModels.ts
@@ -163,6 +163,7 @@ export namespace Component {
     navLink?: NavLink;
     offset?: Vector3;
     chosenColor?: string;
+    customColors?: string[];
   }
 
   export interface ModelShader extends IComponent, IDataBindingRuleMap {}
diff --git a/packages/scene-composer/src/store/helpers/serializationHelpers.ts b/packages/scene-composer/src/store/helpers/serializationHelpers.ts
index ac202fc8b..3e542ed11 100644
--- a/packages/scene-composer/src/store/helpers/serializationHelpers.ts
+++ b/packages/scene-composer/src/store/helpers/serializationHelpers.ts
@@ -137,6 +137,7 @@ function createTagComponent(
     type: 'Tag',
     icon,
     chosenColor: component.chosenColor,
+    customColors: component.customColors,
     ruleBasedMapId,
     valueDataBinding: {
       dataBindingContext,
diff --git a/packages/scene-composer/src/utils/eventDataUtils.ts b/packages/scene-composer/src/utils/eventDataUtils.ts
index 6aeb12bce..5bf217828 100644
--- a/packages/scene-composer/src/utils/eventDataUtils.ts
+++ b/packages/scene-composer/src/utils/eventDataUtils.ts
@@ -21,6 +21,7 @@ export const getBindingsFromTag = (
 ): ITagData => {
   return {
     chosenColor: component.chosenColor,
+    customColors: component.customColors,
     navLink: component.navLink,
     dataBindingContext: !component.valueDataBinding?.dataBindingContext
       ? undefined
diff --git a/packages/scene-composer/translations/IotAppKitSceneComposer.en_US.json b/packages/scene-composer/translations/IotAppKitSceneComposer.en_US.json
index 74c822475..319a0549f 100644
--- a/packages/scene-composer/translations/IotAppKitSceneComposer.en_US.json
+++ b/packages/scene-composer/translations/IotAppKitSceneComposer.en_US.json
@@ -255,6 +255,10 @@
     "note": "Placeholder",
     "text": "Choose a shape"
   },
+  "BvOcQf": {
+    "note": "Custom colors",
+    "text": "Custom colors"
+  },
   "CyWR+b": {
     "note": "placeholder",
     "text": "Value"